5 Year-End Financial Planning/Retirement Considerations: A Guide for CPAs

by Al Kushner, author of 10 Medicare Mistakes Financial Planners Make & How to Avoid Them | October 26, 2023

As the year draws to a close, it’s time for CPAs to gear up and guide their clients through the maze of year-end financial planning and retirement issues. As the economic landscape evolves, so do the challenges and opportunities faced by retirees and those nearing retirement. Here are five considerations:

1. Revisit Retirement Plans

The end of the year is an opportune time to revisit retirement plans. CPAs should take the lead in ensuring clients maximize their contributions to retirement accounts such as 401(k)s and Individual Retirement Accounts (IRAs).

For 2023, the contribution limit for 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan is $20,500. For people aged 50 and above, the catch-up contribution limit is an additional $6,500. For IRAs, the 2023 limit is $6,000, with a catch-up contribution of $1,000 for those aged 50 and over.

CPAs should also review the asset allocation in these retirement accounts. With market conditions changing, it may be necessary to rebalance portfolios to maintain the desired level of risk and potential return.

2. Be Strategic with Tax Planning

Year-end tax planning is a critical aspect of financial planning. CPAs can help clients minimize tax liability by strategically timing income and deductions. For instance, it might make sense to defer income to the next year or accelerate deductions into the current year, depending on clients’ tax situations.

Additionally, CPAs should advise clients about the potential tax implications of their investment decisions. For example, selling investments with lost value can offset capital gains from other investments, reducing the overall tax burden.

3. Avoid Mistakes with Medicare Planning

Medicare planning is a crucial part of retirement planning, and it’s an area where many financial advisors make mistakes. I’ve seen firsthand how these errors can derail a retirement plan. For example, during the annual Medicare open enrollment period (October 15 to December 7), retirees can change their Medicare health plans and prescription drug coverage for the following year. CPAs should remind their clients about this opportunity and help them evaluate their options.

4. Discuss Social Security Benefits

CPAs should review Social Security benefits with their clients. The decision of when to start claiming Social Security can significantly impact the benefits received over a lifetime. For those who can afford to wait, delaying Social Security benefits until after full retirement can increase the monthly benefit amount. On the other hand, for those who need income or have health concerns, claiming early might be the better choice.

5. Initiate Estate Planning

Finally, year-end is an excellent time to review and update estate plans. Changes in family circumstances, tax laws or the value of assets may necessitate revisions to wills, trusts, powers of attorney and beneficiary designations. Thus, CPAs have a critical role in guiding their clients through the intricacies of year-end financial planning and retirement issues. By focusing on the areas outlined above, CPAs can provide invaluable assistance to their clients, helping them navigate the complexities of retirement planning and positioning them for a financially secure future.

Al  Kushner

Al Kushner

Al Kushner is a corporate and individual Medicare speaker, trainer, consultant and author. He is the author of 10 Medicare Mistakes Financial Planners Make & How to Avoid Them.

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